Process innovation – changes in the ways in which they are created and delivered

Position innovation – changes in the context in which the products / services are introduced

Paradigm innovation – changes in the underlying operating methods which frame what the organization does.

For example, a new design of car, a new insurance package for accident prone babies and a new home entertainment system would all be examples of product innovation. And change in the manufacturing methods and equipment used to produce the car or the home entertainment system, or in the office procedures and sequencing in the insurance case, would be examples of process innovation.

Sometimes the dividing line is somewhat not clear – for example, a new jet powered sea ferry is both a product and a process innovation. Services represent a particular case of this where the product and process aspects often merge – for example a new holiday package is a combination of product and process change.

Innovations (we can also call it positive changes) can also take place by changing the product position of an established product or process keeping the consumer use in mind. For example, an old established product in India developed as a snack to help serve children and adults. These associations with Snack were abandoned by the brand owners, when they re-launched the product as a food item aimed at the growing market where it is now presented as a performance enhancing aid to keep one fit during working. This shift is a good example of position innovation.

Sometimes opportunities for innovation emerge when we change the way we look at something and analyse in detail. Henry Ford fundamentally changed the face of transportation neither because he invented the motor car (he was a comparative latecomer to the new industry) nor because he developed the manufacturing process to put one together (as a craft based specialist industry car making had been established for around 20 years). His contribution was to change the underlying model from one which offered a handmade specialist product to a few wealthy customers to one which offered a car for everyman at a price they could afford. The ensuring shift from craft to mass production was nothing short of a revolution in the way cars (and later countless other products and services) were created and delivered.

Of course making the new approach work in practice also required extensive product and process innovation – for example in component design, in machinery building in factory layout and particularly in the social system around which work was organized.

Recent examples of paradigm innovation changes in existing services making them easy for customers include the shift to low cost airlines, the provision of online insurance and other financial services. The changes in the position of drinks like coffee and fruit juice as premium designer products can also be taken into this category. Although in its later days Enron became infamous for financial malpractice it originally came to prominence as a small gas pipeline contractor which realized the potential in this category of change namely in the utilities business. In a climate of market forces taking over and with no regularization and with global internet and other connections through grid distribution systems, energy and other utilities like telecommunication bandwidth increasingly became commodities which could be traded much as Rice or Rubber futures.

From small to big positive changes:

A second dimension to change is the degree of novelty. Clearly updating the styling on our car is not the same as coming up with a completely new concepts car which has an electric engine and is made of new composite materials as opposed to steel and glass. Similarly increasing the speed and accuracy of a lathe is not the same thing as replacing it with a computer controlled laser forming process. These are degrees of novelty in these, running from minor incremental improvements right through to radical changes which transform the way we think about and use them. Sometimes these changes are common to a particular sector or activity but sometimes they are so fundamental and far reaching that they change the basis of society – for example the role played by steam power in the Industrial Revolution. The changes resulting from today’s communications and computing technologies you can say originated way back from Industrial Revolution.